ASSIGNMENT 80: Financial

Management: stock exchange &

Secondary Markets.

ANKITA KHETAWAT, FMB 16 MARCH, 287

PLUS BUSINESS MACHINES LTD.


One of the most recognized names in the AV industry today, Plus Business
Machines Ltd, established its India operation in 1995, with relentless
commitment to quality, consistent dedication to customer satisfaction and
unparalleled standards of service.
With brand names such as LifeSize, Crestron, PLUS, Taxan, Mimio, Extron
Projectiondesign, ClearOne, & Revolabs, Plus Business Machines has established
itself as a value leader across its various product categories of Audio / Visual,
Video Conferencing and AV Integration.
Plus Business Machines also has strong service presence across the country with
company owned service Centres. A distinctive feature of PLUSs service is its
highly motivated and well trained staff that provides the kind of attentive and
sensitive service that is rare today.
The PLUS management is fully committed to providing its partners and end
customers with quality products and services. Its goal and assurance

WE MAKE TECHNOLOGY WORK FOR YOU

Assignment 80:
Financial Management- Stock Exchange & Secondary Markets

WHAT ARE THE PROS AND CONS OF A LISTING?
The Pros: Reasons for Going Public
The relative importance of each argument in favour of a listing depends on the
companys precise circumstances.
Access to capital for growth: A listing brings a company the opportunity to raise
equity finance, both at the time of the initial listing and through further capital
raising at a later stage.
Providing a market for your companys shares: The creation of a public market at
an externally agreed price stimulates liquidity in the shares, and gives
shareholders the opportunity to realise the value of their holdings. This can help
to broad the shareholder base, and enables existing investors whether venture
capitalists or other owners to exit, if they so choose, either on flotation or at a
later date. A key advantage of an AIM listing for your Company when compared
with the Main Market is that it is less regulated. There are no minimum limits on
capitalisation or on the amount of shares in public hands. It is a condition of
listing on the Official List that the expected market value of the shares for which
listing is sought be at least 700,000 and that at least 25% of the shares be in
public hands by the time of admission to listing.
Employee commitment: A public market in the shares means employee share
ownership schemes have a visible value and market for trading. This encourages
employees participation in the ownership of the company, and increases their
long-term commitment to the business. This in turn helps the company to
recruit and retain good staff.
Ability to take advantage of acquisition opportunities: Greater access to capital
and the capability to issue paper with a market value as an acquisition currency,
can increase the potential to make acquisitions of private or quoted companies.
Higher public profile: The listing on a public market inevitably means that the
business and its activities will receive more extensive coverage in the press, thus
widening the awareness of the company and its products. This heightened
profile in turn can help to sustain demand for and liquidity in the shares.
Reassurance for customers and suppliers: Companies coming to market tend to
find that the perception of their financial strength within their own industry is
transformed. This is especially true of a smaller company dealing with much
larger customers, who are reassured that the company has received regulatory
approval and has undergone a rigorous due diligence process.
The Cons: Reasons for Staying Private
It is crucial that a business considering a flotation appreciates the drawbacks,
obligations and costs, both in terms of money and management time, which are
likely to be involved. Some of these are one-off effects before and during the
flotation process, while others such as the higher degree of disclosure
continue beyond the listing. Overall, a flotation brings significant responsibilities
as well as benefits, since it involves the stewardship of outside investors money.
Susceptibility to market conditions: However strong and well run a business is, it
may find that the price and liquidity of its shares are affected by market
conditions beyond its control. A smaller listed company may find that its shares
suffer from illiquidity, or a company of any size may find that its share price is
adversely (or even positively) affected by market rumour, economic
developments or events elsewhere in the same industry.
Potential loss of control: The sale of equity in the company inevitably involves
ceding a degree of management control to the outside shareholders, whose
views must be taken into account. And the need to satisfy shareholders
requirement for a return on their investment, on a continuing basis, can lead to
the company feeling pressure to achieve short-term performance rather than
long-term strategic goals.
Disclosure requirements and on-going reporting: The process of floating, and the
subsequent listing, both involve the company in a much higher degree of
disclosure and reporting than is required of a private company. This will require
additional investment in management information systems, and a more rigorous
application of compliance controls.
Loss of privacy: The greater accountability to outside shareholders inevitably
means that the directors lose much of the privacy and autonomy they may have
enjoyed when running a private company.
Costs and fees: Especially if the company is relatively small, the overall costs
involved in flotation, raising additional capital and the on-going costs of
maintaining a listing may be considerable.
Management time: Both the flotation processes itself and the continuing
obligations may, unless the advisers properly manage the process, use up
significant amounts of management time.

WHAT IS THE LISTING CRITERIA IN SME EXCHANGE?

Financials

Post Issue Paid up Capital: The post-issue paid up capital of the company
shall be at least Rs. 1 crore.
Net worth Net worth :(excluding revaluation reserves) of at least Rs.1 crore
as per the latest audited financial results.
Net Tangible Assets: At least Rs.1 crore as per the latest audited financial
results.
Track Record: Distributable profits in terms of Section 205 of the Companies
Act 1956 for at least two years out of immediately preceding three
financial years (each financial year has to be a period of at least 12
months). Extraordinary income will not be considered for the purpose of
calculating distributable profits. Or The net worth shall be at least Rs.3
crores.

Other Requirements

It is mandatory for a company to have a website.
It is mandatory for the company to facilitate trading in demat securities and
enter into an agreement with both the depositories.
There should have been no change in the promoters of the Company in the one
year preceding the date of filing application to BSE for listing on SME segment.




Reference:
www.charltonslaw.comenpublicationsarticles.doc

http://www.bsesme.com/static/getlisted/criteriaisting.aspx?expandable=0